Friday was Non-farm payroll day with an announced 248,000 new jobs created
in September, the unemployment rate dropped to 5.9%. This is the lowest
unemployment rate since 2008 so it “looks” like we have recovered and the
financial crisis should only be a bad memory. I am going to tell you we
are living in a financial mirage.
In September, if you look under the hood you will also see 315,000 are no
longer included in the labor force bringing the total up to 92.6 million
people. Looking back to 2008, there were 78 million “not in the labor
force” so we can see a nearly 15 million person increase in this
category since then. We also had an “adjustment” of a negative
26,000 jobs subtracted to arrive at the 248,000 figure, so if believable
the real job growth was 274,000. “Believable”? Not by me, here is
Paul
Craig Roberts take. My point is this, there are 15 million more
people “not working” since 2008 but for “appearance sake” are categorized as
“not in the workforce” or not looking for a job. Doing some very simple
math, what do these 15 million represent? Somewhere between 4% and 5%
of the entire U.S. population, that’s what!
So we have the “lowest” unemployment since 2008 at 5.9% and this headline
will be splashed all over the headlines that say “happy times are here
again!” Before doing the very difficult math of “how much does 5.9
+ four or five equal?” I would like to point something out. We are
now about 30 days away from the national midterm elections, could the
unemployment rate have been “engineered” downward to paint a rosy picture so
the balance of power in the Senate remains Democrat? This was the very
last employment number the public will see before they “vote early and vote
often.” OK, I know you were dying to do the math, 5.9% plus either four
or five percent equals either 9.9% or 10.9% … Of course, if unemployment
was calculated the way it was back in the 1980′s we would have a figure
approaching 20% but that would be totally unacceptable for the financial
mirage we are living.
Before moving on I do want to point out what Michelle Obama has
been telling you herself. She has recently been heard saying the
upcoming elections for the Senate are very important ones. She says if
the “evil Republicans” take power, her husband will be impeached and all
of the wonderful plans he rammed through may possibly be reversed. I
agree with her, the upcoming elections are very important and probably
the last ones before martial law descend the landscape.
Another “mirage” or should I say “Houdini trick” is how the elephant in
the room has disappeared. Have you ever seen old black and white photos
or even movie footage of the bread lines back in the 1930′s? Do you
remember thinking to yourself how bad it must have been to have lived back
then? For me personally, those images were always scary because of the
despair it portrayed. Fast forward 80 years or so to the present
and we have bread lines all over again …only you can’t see them.
There are now almost 47 million people on the SNAP program, this is about
14% of the population alone without counting food banks and charities that
feed the homeless. Can you imagine seeing 1 million people in your
state lining up two or three times a day for a meal? Can you imagine
watching it on the news? Or worse, can you imagine seeing people
fighting for places in line, freezing in the winter or sweltering in the
summer while waiting for their turn? There are massive bread lines, you
just don’t see them. You don’t see them because this too is part of the
financial mirage (miracle?) called the United States.
Not to worry though, the stock market is up. This too is mirage
like. You have to first ask yourself, is the stock market “up” because
of all the liquidity provided by the various QE’s? And since QE is now
ending because the economy is “so strong” and unemployment “so low,” can the
stock market stay up without the extra trillions of $ floating around?
First let me point out how “up” the market is internally. The NASDAQ
now has nearly 50% of its stocks in a bear market (down 20% or more).
The Russell 2000 sports 40% of their stocks down over 20% and the average
itself is now negative year over year for the first time since 2012.
New highs versus new lows on the NYSE have almost turned upside down, on a
daily basis there are less new highs and more new lows than any time since
August 2013. Globally the advance/decline ratio has also broken down
badly …and all this at a time when the Fed has promised to completely shut
off the excess liquidity flow of QE. Can stocks go up further from all
time high valuation levels while “free liquidity” is ended? I can only
say this, stock market crashes have always come with the internals of the
market weakening while the “façade” of high prices “looks” good and the fear
of a crash nowhere to be found. We are there now in my opinion.
This past week began with assurances Ebola could never reach the U.S., by
the end of the week we knew differently. So far Dallas and Washington
DC have confirmed cases and hospitals across the country have over 100 cases
where Ebola is suspected. We also heard JP Morgan was “hacked” and
76 million customer’s information was compromised, this of course was blamed
on the Russians. An epidemic would surely change the way business and
commerce is conducted. Waking up one day to see your financial
institution’s database and balances in shambles would also affect business
and commerce. I point at these two examples because I believe the
entire financial system is a mirage yet something will need to be blamed as
the “cause” for its coming down.
Nothing financial is as it seems or is being portrayed. I believe
the Fed will by necessity have to reverse course and begin a new and even
bigger round of QE in a desperate attempt to save the financial system
again. QE has never worked in the first place, the public
“reports” have been rigged so as to paint the picture that it has. The
Fed will again use the only tool (QE) they have left. QE only
provides liquidity, not solvency and insolvency is the problem. This
can be equated to trying to build a house using only a hammer when shovels, screwdrivers,
saws, etc. are also needed.
The “financial mirage” started out during the Reagan years as Social
Security taxes were used as general funds to hide a bigger deficit than was
being reported, it went downhill from there. So here we are, living a
daily lie because the truth is too horrible to face and our leaders believe
“we can’t handle the truth.”
